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Using Brain Signals to Solve Public Goods Problems


Many challenges facing society stem from the conflict between the public good and the private interests of individuals. Whenever an individual can benefit from letting others contribute to public goods, from roadways to clean water, there is a self-interested tendency to do so. To make matters worse, if those who are willing to contribute believe that others are not, they will often no longer contribute. These so-called free-rider problems have been a challenge for economics, public policy, and political science since the work of Adam Smith. The field of mechanism design made substantial progress during the 20th century. Unfortunately, a major contribution of the theory was to show that an ideal solution is not possible when institutions rely only on revealed values. Research by IGERT trainee Ian Krajbich and IGERT faculty Colin Camerer and Antonio Rangel has now shown that this problem can be overcome in simple public good settings by using functional brain imaging to obtain informative signals of individuals’ values and using those signals to induce truthful reporting. Their results take the first step in combining physiological measurements with carefully designed mechanisms to create better institutions for collective decision-making. Their results were reported in Science (326: 596 – 599).

Address Goals

This research is the first to use functional brain imaging to help create better institutions for collective decision-making. As such, it is a leading example of the potential societal applications of the emerging science of neuroeconomics. Neuroeconomics represents a paradigmatic example of fundamental transformational science, as it brings together economics and neuroscience to provide fundamental new insights into the nature of both individual and collective decision-making. Many of our most pressing societal challenges depend on a better understanding of individual and collective decision-making, from why individuals over-spend and under-save to the decision making involved in addiction and obesity. The unique methodology and insights of neuroeconomics, as highlighted in this achievement, helps to position the nation as a global leader in a transformational science that engages both national and global societal challenges.